Blockchain applications are driving significant new investment in related Internet of Things (IoT) projects. The rapidly evolving distributed ledger technology will alter established industries beyond financial services, according to the latest worldwide market study by ABI Research.
In addition to online transactions, blockchain technology can also be used for communication, identification, ownership, and device management. Besides, with continued architecture improvements and ecosystem expansion, blockchain technology is moving into smart contracts and other promising use cases.
Blockchain Apps Market Development
"These pre-programmed, self-executing, autonomous contracts can be used for numerous applications, including: digital identities, governance, asset tracking, and M2M transactions, among many others," said Michela Menting, research director at ABI Research.
Through these evolving IoT related technologies, blockchain can affect and perhaps transform all kinds of interactions: from business and legal to social and political.
The growing potential to explore distributed ledger applications as a market beyond cryptocurrency can be measured against current venture capital funding, which is reported to have reached about half a billion dollars globally in 2016.
According to the ABI assessment, there are already more than 1,500 start-ups that have adopted blockchain technology. But not all of these application scenarios are public. Some blockchains are private, while others are of a hybrid nature or run by an industry consortium.
Furthermore, not all distributed ledger technologies are blockchains, as the goals and objectives of the various industry ecosystem participants are compelled by other commercial imperatives.
That being said, while distributed ledger technology has transformation potential, it also needs to overcome numerous real or perceived obstacles. As an example, it's not immune from vulnerabilities, and ABI analysts believe that other unknowns may inhibit further growth and eventual market maturity.
Vendors, such as BitNation, Modum, MultiChain, and Riddle&Code, will need to create interest in blockchain for the ultimate end-users, and create broad awareness of how it can be applied in value-added applications across many different sectors.
Outlook for Blockchain Application Growth
However, first the vendors must address issues associated to immutability, scale, cost, and privacy -- as well as clarify the legal uncertainties surrounding smart contracts. Above all, the leading vendors will also likely need to tackle misconceptions about what blockchain can enable, and any inherent limitations.
"While the cryptocurrency market may be maturing, IoT applications are still largely untested," concludes Menting. "The excitement around Bitcoin success is nonetheless fueling a great many endeavors beyond fintech that are likely to impact the IoT market."